OCC gives green light for banks to custody digital assets

The Office of the Comptroller of the Currency (OCC), the regulatory body overseeing national banks in the US, made a significant announcement on Friday concerning crypto activities. Banks are now allowed to conduct specific crypto-related operations without prior regulatory approval. This move permits banks to custody digital assets. The OCC's statement detailed the crypto activities national banks can now participate in, such as crypto-asset custody services, certain stablecoin operations, and involvement in distributed ledger networks to serve as validators on public Proof-of-Stake networks. This announcement represents a shift in the regulatory approach of this administration, removing the need for banks to obtain advance approval from regulators for these activities.

Under the Biden administration, bank personnel must inform their supervisors about planned crypto activities, showcase their risk management strategies, and ensure no objections from supervisory bodies. The OCC also retracted its previous advisories cautioning banks against involvement in the crypto sector. Acting Comptroller Rodney Hood emphasized the importance of strong risk management controls for novel bank activities, similar to those in place for traditional activities. This action aims to ease the burden on banks engaging in crypto-related activities and ensure consistency in how these activities are regulated by the OCC, regardless of the technology involved. Hood expressed commitment to maintaining effective regulations without unnecessary burdens, while ensuring a robust federal banking system.

Nic Carter, partner at Castle Island Ventures and co-founder of Coinmetrics.io, described the news as the "biggest of the day." Alexander Grieve, VP of Government Affairs at Paradigm, referred to the announcement as the end of "Operation Chokepoint 2.0." This development coincided with the White House Crypto Summit and followed President Donald Trump's executive order establishing a strategic reserve for Bitcoin and select cryptocurrencies.

Despite the positive news for the crypto sector, Caitlin Long, founder of Custodia Bank and member of the Wyoming Blockchain Task Force, cautioned that Operation Chokepoint 2.0 would only truly end when the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) rescind their anti-crypto guidance, and Custodia Bank receives its Fed master account. The original post titled "OCC gives green light for banks to custody digital assets" appeared first on CryptoSlate.